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Inflation is...
A general increase in overall price levels
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#1 measure of inflation?
Consumer price index
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Acceptable rate of inflation is...
2% per year
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Inflation can be defined as...
Too many dollars changing too few goods
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Prices rise, value ($) falls. why?
Because your purchasing power (real income) falls
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#1 measure of economic growth is...
Gross domestic product: the total dollor value of all final, new goods and sevices produced in a nation in 1 year
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Economy is said to be in a recession When?
When the GDP is below the base year for two quarters in a row (6 months)
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The cost of something Is...
What you give up to get it!!! ( opp lost is the opp cost)
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People do more of something when?
The reward increases and less of something when the penalty increases
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People initially respond to what?
Incentives
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Acceptable rate of unemployment is?
5%
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Role of the federal reserve Bank
Control intrest rates and the money supply through monetary policy
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Fiscal policy is used by...
Congress and the president to stabalize the economy by changing taxes and government spending
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Budget deficit
Government spending exceed revenues in one year
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Our current deficit is
$1,500,000,000,000
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National debt is...
$13,800,000,000,000
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Regressive tax takes ...
A larger percentage from lower incomes
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Progressive tax takes...
A larger percentage from lower incomes
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A proportional (flat) tax...
Takes the same percentage from all incomes.
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Any tax not based on income...
Tends to be regressive
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Exports?
G/s sold to other countrires
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Imports?
G/s bought from other countries
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Trade deficit occurs when?
Imports are greater than exporrts
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Trade surplus occurs when?
Exports are greater than imports
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Fringe benefits are...
Employer supplied benifits in addition to wages
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You should have an emergency fund equal to...
3-6 months of your salary
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What to do with a credit card.
- •shop around for the lowest credit card interest rate
- •pay dept asap!
- •pay more then the minnimum monthly requirement
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How do credit card companies make money?
By keeping you in dept!
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What is FICA?
Federal Insurance Contribution Act
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FICA is also know as...
Social security
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Social security is?
A payroll tax on current workers to pay income to currebt retires
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Medicare is?
A federal health insurance program fir retired people paud for during your working years.
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What is Medicaid?
Federal and state healtg insurance program paid for by taxes for low income people
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What is economics?
Economics is the study orlf choices people make to satisfy unlimeted needs and want to with limited economic resources
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What is the US economic system?
Market econony or capitalism with heave reliance on market forces in the private sector
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Four features of capitalism:
- 1. Right to own property
- 2. Self- interest profit motives
- 3. Consumers rule
- 4. Competitions
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What is bankruptcy?
A legal declaration of inability to oay debts. Stays on your credit score for 10 years
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Rules for buying a home:
- 1. Do not borrow more than 2 times your annual income
- 2. Your monthly house (or rent) payment should no br more than (1/3) of your monthly net income
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